Fox News Network, LLC v. TVEyes, Inc.

Defendant
TVEyes, Inc. ("TVEyes") is a media company that
continuously records the audiovisual content of more than 1,
400 television and radio channels, imports that content into
a database, and enables its clients, for
$500 per month, to view, archive, download, and email to
others ten-minute clips. TVEyes also copies the
closed-captioned text of the content it imports, allowing its
clients to search for the clips that they want by keyword, as
well as by date and time.

Plaintiff
Fox News Network, LLC ("Fox") sued TVEyes for
copyright infringement in the United States District Court
for the Southern District of New York. The principal question
on appeal is whether TVEyes's enabling of its clients to
watch Fox's programming is protected by the fair use
doctrine.

TVEyes's
re-distribution of Fox's content serves a transformative
purpose insofar as it enables TVEyes's clients to isolate
from the vast corpus of Fox's content the material that
is responsive to their interests, and to access that material
in a convenient manner. But because that re-distribution
makes available to TVEyes's clients virtually all of
Fox's copyrighted content that the clients wish to see
and hear, and because it deprives Fox of revenue that
properly belongs to the copyright holder, TVEyes has failed
to show that the product it offers to its clients can be
justified as a fair use.

Accordingly,
we reverse the order of the district court to the extent that
it found fair use. Our holding does not encompass the copying
of Fox's closed-captioned text into a text-searchable
database, which Fox does not challenge on appeal. We affirm
the district court's order to the extent that it denied
TVEyes's request for additional relief. We also remand
for entry of a revised injunction.

Brianna L. Schofield (Law Students Tomasz Barczyk and J.
William Binkley on the brief), Samuelson Law, Technology
& Public Policy Clinic, UC Berkeley School of Law,
Berkeley, CA; [**] Lila Bailey, Law Office of Lila
Bailey, San Francisco, CA, for amici curiae Internet Archive;
American Library Association; Association of College and
Research Libraries; Association of Research Libraries;
Society of American Archivists, in support of TVEyes, Inc.

In this
copyright infringement suit, defendant TVEyes, Inc.
("TVEyes") offers a service that enables its
clients to easily locate and view segments of televised video
programming that are responsive to the clients'
interests. It does so by continuously recording vast
quantities of television programming, compiling the recorded
broadcasts into a database that is text-searchable (based
primarily on the closed-captioned text copied from the
broadcasts), and allowing its clients to search for and watch
(up to) ten-minute video clips that mention terms of interest
to the clients.[1] Plaintiff Fox News Network, LLC
("Fox"), which has sued TVEyes in the United States
District Court for the Southern District of New York, does
not challenge the creation of the text-searchable database
but alleges that TVEyes infringed Fox's copyrights by
re-distributing Fox's copied audiovisual content, thereby
enabling TVEyes's clients to access that content without
Fox's permission. The principal question on appeal is
whether TVEyes's enabling of its clients to watch
Fox's programming is protected by the doctrine of fair
use. See 17 U.S.C. § 107.

The
district court held that fewer than all of the functions of
TVEyes's service constitute a fair use. Specifically, the
district court deemed a fair use the functions enabling
clients of TVEyes to search for videos by term, to watch the
resulting videos, and to archive the videos on the TVEyes
servers; but the court held that certain other functions were
not a fair use, such as those enabling TVEyes's clients
to download videos to their computers, to freely e-mail
videos to others, or to watch videos after searching for them
by date, time, and channel (rather than by keyword). The
district court therefore dismissed Fox's challenge to
important functions of TVEyes's service, but also held
that TVEyes was liable to Fox for copyright infringement on
account of other functions of that service. A permanent
injunction limited various aspects of TVEyes's
service.[2]

This
appeal shares features with our decision in Authors Guild
v. Google, Inc., 804 F.3d 202 (2d Cir. 2015)
("Google Books"). That case held that
Google's creation of a text-searchable database of
millions of books (including books under copyright) was a
fair use because Google's service was
"transformative" and because integral features
protected the rights of copyright holders. However, we
cautioned that the case "test[ed] the boundaries of fair
use." Google Books, 804 F.3d at 206. We
conclude that defendant TVEyes has exceeded those bounds.

TVEyes's
re-distribution of Fox's audiovisual content serves a
transformative purpose in that it enables TVEyes's
clients to isolate from the vast corpus of Fox's content
the material that is responsive to their interests, and to
access that material in a convenient manner. But because that
re-distribution makes available virtually all of Fox's
copyrighted audiovisual content--including all of the Fox
content that TVEyes's clients wish to see and hear--and
because it deprives Fox of revenue that properly belongs to
the copyright holder, TVEyes has failed to show that the
product it offers to its clients can be justified as a fair
use.

Accordingly,
we reverse the order of the district court to the extent it
held that some of the challenged TVEyes functions constituted
a fair use. We affirm the order to the extent that it denied
TVEyes's request for additional relief. Furthermore,
because the district court's issuance of an injunction
was premised on the incorrect conclusion that much of what
TVEyes offered was a fair use, we remand for the district
court to revise the injunction in light of this opinion.

I

TVEyes
is a for-profit media company. It offers a service that
allows its clients to efficiently sort through vast
quantities of television content in order to find clips that
discuss items of interest to them. For example, a client in
marketing or public relations interested in how a particular
product is faring in the media can use the TVEyes service to
find, watch, and share clips of recent television broadcasts
that mention that product.

The
service works this way. TVEyes records essentially all
television broadcasts as they happen, drawing from more than
1, 400 channels, recording 24 hours a day, every day. By
copying the closed-captioned text that accompanies the
content it records (and utilizing speech-to-text software
when necessary), TVEyes creates a text-searchable transcript
of the words spoken in each video. The videos and transcripts
are consolidated into a database. A client inputs a search
term and gets a list of video clips that mention the term. A
click on a thumbnail image of a clip plays the video,
beginning fourteen seconds before the search term was spoken,
and displays a segment of the transcript with the search term
highlighted. The parties dispute the quality of the clips.
Fox contends that the clips are high definition; TVEyes
contends that the clips are grainier than the original
broadcasts. The clips can be played for no more than ten
minutes, but a user can play an unlimited number of clips. To
prevent clients from watching entire programs, TVEyes (during
the course of this litigation) implemented a device that is
claimed to prevent clients from viewing consecutive segments.
The parties dispute whether this measure is effective.

TVEyes's
service has ancillary functions. A TVEyes client may
"archive" videos permanently on the TVEyes servers
and may download videos directly to the client's
computer. These services are useful because TVEyes otherwise
deletes captured content after thirty-two days. Clients can
also email the clips for viewing by others, including those
who are not TVEyes clients. And clients can search for videos
by date, time, and channel (rather than by keyword). The
parties dispute whether clients can watch live broadcasts on
TVEyes.

A
TVEyes subscription costs approximately $500 per month, is
available for business and professional use, and is not
offered to private consumers for personal use. Clients
include journalists, government and political organizations,
law enforcement, the military, for-profit companies, and
non-profits.

TVEyes
asserts that it restricts its clients' use of its content
in various ways. For example, clients are required to sign a
contract that limits their use of clips to "internal
purposes only" and are warned upon downloading a clip
that it is to be used for only "internal review,
analysis or research." Fox contends that these
safeguards are ineffective and disputes the assertion by
TVEyes that its service is primarily used for
"internal" research and analysis.

Fox
claims that at some point TVEyes unsuccessfully approached it
to procure a license to use Fox programming. Fox demanded
that TVEyes stop using its programming; when TVEyes refused,
litigation ensued. The lawsuit focuses on nineteen
copyrighted Fox broadcasts. The legal question is whether
TVEyes has a "fair use" defense to Fox's
copyright infringement claims. 17 U.S.C. § 107.

II

The
Copyright Act provides:

[T]he fair use of a copyrighted work . . . for purposes such
as criticism, comment, news reporting, teaching . . .,
scholarship, or research, is not an infringement of
copyright. In determining whether the use made of a work in
any particular case is a fair use the factors to be
considered shall include--

(1) the purpose and character of the use, including whether
such use is of a commercial nature or is for nonprofit
educational purposes;

(2) the nature of the copyrighted work;

(3) the amount and substantiality of the portion used in
relation to the copyrighted work as a whole; and

(4) the effect of the use upon the potential market for or
value of the copyrighted work.

Id.

In fair
use litigation, courts undertake a "case-by-case
analysis" in which each factor is considered, "and
the results [are] weighed together, in light of the purposes
of copyright." Campbell v. Acuff-Rose Music,
Inc., 510 U.S. 569, 577-78 (1994). The factors are
non-exclusive, but consideration of each is
mandatory.[3]Swatch Grp. Mgmt. Servs. Ltd. v.
Bloomberg L.P., 756 F.3d 73, 81 (2d Cir. 2014). Some of
the factors are more important than others, with the fourth
(market impact) being "the single most important
element." Harper & Row Publishers, Inc. v.
Nation Enters., 471 U.S. 539, 566 (1985). Fair use is an
affirmative defense, so TVEyes bears the burden of proving
it. Am. Geophysical Union v. Texaco, Inc., 60 F.3d
913, 918 (2d Cir. 1994).

It is
useful to analyze separately distinct functions of the
secondary use (i.e., the use by TVEyes of Fox's
copyrighted material), considering whether each independent
function is a fair use. See Google Books, 804 F.3d
at 216-18. TVEyes has two core offerings: the "Search
function" and the "Watch function." The Search
function allows clients to identify videos that
contain keywords of interest. The Watch function allows
TVEyes clients to view up to ten-minute, unaltered
video clips of copyrighted content. Fox does not challenge
the Search function on appeal. Fox's challenge is to the
Watch function, and we determine that its inclusion renders
TVEyes's package of services unprotected by the fair use
doctrine. That conclusion subsumes and obviates consideration
of certain functions that are subsidiary to the Watch
function, such as archiving, downloading, and emailing the
video clips.

Turning
to the Watch function, we next consider each of the four
factors listed in § 107.

A

In
considering the first statutory factor--the "purpose and
character" of the secondary use, 17 U.S.C. §
107(1)--the primary inquiry is whether the use
"communicates something new and different from the
original or [otherwise] expands its utility, " that is,
whether the use is "transformative." Google
Books, 804 F.3d at 214. To be transformative, a use must
"do[] something more than repackage or republish the
original copyrighted work"; it must "'add[]
something new, with a further purpose or different character,
altering the first with new expression, meaning or message .
. . .'" Authors Guild, Inc. v. HathiTrust,
755 F.3d 87, 96 (2d Cir. 2014) (quoting Campbell,
510 U.S. at 579). "Although . . . transformative use is
not absolutely necessary for a finding of fair use, . . .
[transformative] works . . . lie at the heart of the fair use
doctrine, " Campbell, 510 U.S. at 579, and
"a use of copyrighted material that 'merely
repackages or republishes the original' is unlikely to be
deemed a fair use, " Infinity Broad. Corp. v.
Kirkwood, 150 F.3d 104, 108 (2d Cir. 1998) (quoting
Pierre N. Leval, Toward a Fair Use Standard, 103
Harv. L. Rev. 1105, 1111 (1990)).

Precedent
is helpful. Both parties rely most heavily on Google
Books, which provides the starting point for analysis.

In
Google Books, a consortium of libraries collaborated
to make digital copies of millions of books, many of them
under copyright. Google pooled these digital copies into a
text-searchable database. 804 F.3d at 207. Anyone could
search the database free. When a user entered a search term,
Google returned a list of books that included the term, and,
for each responsive book, Google provided a few
"snippets" that contained the term. Id.

We held
that Google's copying served a transformative purpose
because it created a text-searchable database that
"communicate[d] something new and different from the
original." Id. at 214. "[T]he result of a
word search is different in purpose, character, expression,
meaning, and message from the page (and the book) from which
it is drawn." Id. at 217 (quoting
HathiTrust, 755 F.3d at 97).

We also
held that the "snippet view" of unaltered,
copyrighted text "add[ed] important value to the basic
transformative search function" by allowing users to
verify that the list of books returned by the database was
responsive to the user's search. Id. Thus, a
user searching for the term "Hindenburg" could
infer from snippets whether the book was referencing the
Weimar president or the exploded zeppelin. See id.
at 217-18.

TVEyes's
copying of Fox's content for use in the Watch function is
similarly transformative insofar as it enables users to
isolate, from an ocean of programming, material that is
responsive to their interests and needs, and to access that
material with targeted precision. It enables nearly instant
access to a subset of material--and to information about the
material--that would otherwise be irretrievable, or else
retrievable only through prohibitively inconvenient or
inefficient means.

Sony
Corporation of America vs. Universal City Studios, Inc.
is instructive. See464 U.S. 417 (1984). In
Sony, a television customer, who (by virtue of
owning a television set) had acquired authorization to watch
a program when it was broadcast, recorded it in order to
watch it instead at a later, more convenient time. That was
held to be a fair use. While Sony was decided before
"transformative" became a term of art, the apparent
reasoning was that a secondary use may be a fair use if it
utilizes technology to achieve the transformative purpose of
improving the efficiency of delivering content without
unreasonably encroaching on the commercial entitlements of
the rights holder.

The
Watch function certainly qualifies as technology that
achieves the transformative purpose of enhancing efficiency:
it enables TVEyes's clients to view all of the Fox
programming that (over the prior thirty-two days) discussed a
particular topic of interest to them, without having to
monitor thirty-two days of programming in order to catch each
relevant discussion; and it eliminates the clients' need
even to view entire programs, because the ten most relevant
minutes are presented to them. Much like the television
customer in Sony, TVEyes clients can view the Fox
programming they want at a time and place that is convenient
to them, rather than at the time and place of broadcast. For
these reasons, TVEyes's Watch function is at least
somewhat transformative.[4]

***

The
first statutory factor also implicates considerations
distinct from whether the secondary use is transformative. In
particular, Fox argues that the "commercial nature"
of TVEyes's copying (its sale of access to Fox's
content) weighs against a finding of fair use. 17 U.S.C.
§ 107(1).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
commercial nature of a secondary use weighs against a finding
of fair use. See Campbell, 510 U.S. at 585. And it
does so especially when, as here, the transformative
character of the secondary use is modest. See id. at
579 ("[T]he [less] transformative the new work, the
[more] will be the significance of other factors, like
commercialism . . . ."). The Watch function has only a
modest transformative character because, notwithstanding the
transformative manner in which it delivers content, it
essentially republishes that content unaltered from its
original form, with no "new expression, meaning or
message." HathiTrust, 755 F.3d at 96 (quoting
Campbell, 510 U.S. at 579); cf. Kirkwood,
150 F.3d at 106 (service that transmits unaltered radio
broadcasts in real time over telephone lines is not
transformative); Video Pipeline, Inc. v. Buena Vista Home
Entm&#39;t, Inc., 342 F.3d 191, 199-200 (3d Cir. 2003)
(service that streams short ...

Our website includes the first part of the main text of the court's opinion.
To read the entire case, you must purchase the decision for download. With purchase,
you also receive any available docket numbers, case citations or footnotes, dissents
and concurrences that accompany the decision.
Docket numbers and/or citations allow you to research a case further or to use a case in a
legal proceeding. Footnotes (if any) include details of the court's decision. If the document contains a simple affirmation or denial without discussion,
there may not be additional text.

Buy This Entire Record For
$7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.